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Volume 5, Issue 35

FALL MINNESOTA CREDIT UNION FOUNDATION FINANCIAL EDUCATION GRANT APPLICATION PERIOD IS NOW OPEN

The Minnesota Credit Union Foundation – with the mission of providing resources for credit unions and communities to prosper and thrive – has a strong commitment to financial education. The Foundation is offering $25,000 in grants to assist Minnesota credit unions in implementing financial education projects.

Minnesota credit unions may partner with non-credit union organizations for grant funding, so long as the project demonstrates a positive impact on a credit union’s community. Applications will be evaluated on a variety of factors, including credit union value, community impact, collaboration, creativity, and receipt of previous funding.

Applications are currently being accepted through Friday, September 23. Grantswill be evaluated by the Minnesota Credit Union Foundation Board of Directors, and recipients will be announced by October 10.

Examples of financial education projects/initiatives include:

establishing an in-school branch

hosting seminars on credit, debt, budgeting, etc., for members of the community

teaching financial literacy classes in local schools

partnering with a community organization to teach personal finance skills

coordinating retirement or estate planning workshops

supplying local schools with financial education curriculum

Grants are not eligible to fund: salaries, pass-through funding, incentive payments, or products/services that exclusively benefit members. A grant application may include these elements as a part of the overall project, but will be excluded from funding consideration.

Vote 2016 Outreach Resources Available

Vote 2016 provides nonpartisan voter resources to engage and inform employees, customers, members and other audiences. The program’s goals are to promote mnvotes.org as an online resource, help eligible Minnesotans register and vote, and make Minnesota the nation’s leader in voter turnout.

Historically, Minnesota leads the nation in voter turnout. However, in 2014, the state slipped to number six in ranking. One of the reasons for Minnesota’s high level of civic engagement has been the involvement of its business community leadership.

The Office of the Secretary of State has produced a range of voter educational resources. The available resources include template employee communications, voter guides, social media postings, videos and other resources all available online.

“Minnesota’s credit unions have a vested interest in civic engagement and policy development,” said MnCUN Vice President – Governmental Affairs Mara Humphrey. “To that end, I hope you will support nonpartisan voter outreach to encourage registration and turnout of eligible Minnesota voters this fall.”

With questions about the voter outreach materials, please contact Dennis Smith in the Secretary of State’s office by email or by phone at (651) 201-1356.

NCUA NEV Supervisory Test overview provided by The Baker Group

The NCUA Board Meeting held on June 16, 2016 introduced some key changes to their supervision of credit unions’ interest rate risk. The NCUA’s Office of Examination and Insurance recommended the NCUA Board consider releasing a proposal in the coming months to incorporate an “S” for “Sensitivity to Market Risk” into the current CAMEL rating system for credit unions. Currently, the NCUA assesses interest rate risk as part of the liquidity rating. Federal banking supervisors already include an “S” component in the rating system, as do 16 state credit union regulators.

The NCUA is revising the examiner’s guide, streamlining the scope of the examiner review procedures, and redefining the thresholds used in the exam process to categorize the supervisory risk rating for interest rate risk. As part of redefining the thresholds used in the exam process, a new NEV supervisory interest rate risk test will be performed. The results of this test will drive whether there is an increase or decrease in the number of required review steps during the examination. The supervisory test will result in a risk level of one of the following: low, moderate, high, or extreme. The NEV Supervisory Test was chosen as it is a total balance sheet measure of interest rate risk, and the NCUA recognizes the limitations with previously relied upon Call Report based metrics such as the net long term asset ratio, the 17-4 test, and the SIRRT ratio.

The NEV Supervisory Test will utilize economic values obtained from a credit union’s current interest rate risk model provider. Those numbers serve as the starting point for the supervisory test. However, the supervisory test standardizes the treatment of non-maturity share values. This “levels the playing field” as there is always a degree of uncertainty surrounding the assumptions around estimated values for non-maturity shares. A premium of 1% is applied to all non-maturity share accounts and a 4% premium for the shocked scenario (currently +300 bps). Part 1 of the test looks at the level of the post-shock NEV ratio and Part 2 looks at the percentage change in NEV from the base case to shock (NEV Sensitivity). Only one of the two tests has to cross a threshold to get categorized into that risk level. For example, if a credit union’s test results in a post-shock NEV ratio of 5.50% and a NEV Sensitivity of 67%; their risk level will be considered “high,” even though their post-shock NEV ratio falls in the “moderate” risk level category.

The Baker Group is one of the nation’s largest independently owned securities firms specializing in investment portfolio management for community financial institutions. For more information about The Baker Group, contact MnCUN Vice President – Network Service Corporation John Ferstl by email or at (651) 288-5505.